Part 5: The State of VC in the MENA

Rita Makhoul, Feb 14 2018


More than $900 million has been invested in regional digital startups in the last 4 years. With over 100 active institutional investors across the region, MENA has witnessed a significant proliferation of new funding institutions in the past 5 years, with Venture Capital (VC) funds, in particular, capturing the largest percentage of the investor community and doubling in number from 2013 to 2015.

We spoke to key investors across the region to get their perspective on the state of venture capital in the region, the major trends, what they consider a good venture return, their predictions, and more. 

In part 1, you can find their overall opinion on the current status of venture capital in the region today.

In part 2, they let us know how they look at ROI and what they consider a good venture.

In part 3, they shared the major trends they've seen in the region in regards to VC asset class, and what that means for allocation to the class going forward.

In part 4, they gave us an idea of what enabling components are still lagging in the MENA ecosystem, and how they see the current funded startups exiting. 

In this final part of the series, we got an understanding of what to expect in the next couple of years.

 

What predictions do you have for the next couple of years?

 


Walid Hanna
Walid Hanna
CEO @ MEVP

 

We predict a growth of Series B funding, as the current Seed/Series A stage companies require further funding to scale. The key booming sectors, such as Fintech, E-commerce, New Media, and FoodTech will realize further growth and exits, while additional verticals begin to catch up. We see Artificial Intelligence and Blockchain technologies as the cutting-edge of venture capital moving forward, so a vast opportunity exists for the startups that can incorporate these technologies in a manner that brings value to the masses.

 

 


Fares Ghandour
Fares Ghandour
Partner @ Wamda Capital

 

Fintech will continue to approach center-stage for many investors. We'll also likely get an exit above $1bn, another 2 above $100m, and a few smaller ones here and there as well. Saudi will continue to open up for foreign businesses and the amount of financing towards Saudi-first startups will over-take financing towards the entirety of the remainder of the region combined, at least at the Seed and Series A stage.

 


 

 

Abdulaziz Al-Loughani
Abdulaziz Al Loughani
Managing Partner @ Faith Capital 
 
We think that digitizing big traditional offline/fragmented markets will yield better returns and create more social impact. Developmental programs for diversifying GCC petrodollar economies and promoting entrepreneurship will continue to drive a lot of ideas into the modern startup journey, and hopefully smarter money to cherry-pick winners from all the activity/brewing happening in incubation/developmental programs in the region. Another important milestone we think will happen in the next couple of years is the marking of VC asset class on sovereign funds’ asset allocation in the region. We will have a more liberal economy than the current state-owned one.

 


Namek_headshot+2017
Namek Zu'bi
Managing Partner @ Silicon Badia 

Continued growth across the board. More funds, more capital, more companies, more exits, more failures - and a lot of fun.

Omar Sati
Omar Sati
Managing Diretor @ Dash Ventures
 
The bourgeoning regional VC landscape and the increased activity of regional funds investing internationally, are expected to elevate the region’s visibility and exposure as a genuine innovation hub as well as further fuel the startup scene, particularly, entrepreneurial initiatives. Based on our opportunity database and pipeline this year we are seeing more AI, Blockchain and SAAS enabled marketplaces. The space remains early and underdeveloped, yet we expect more of these opportunities to be backed by VC firms in the short-term as monetization methods and commercial applications are more apparent and comprehensive. E-commerce is also making a comeback with a shift towards vertically-integrated, direct-to-consumer online brands where there is full control over the supply chain with more specialized offerings. Finally, we believe there is an opportunity for the region to make it’s mark on the blockchain revolution. Innovation hubs outside of the US, such as China, India, Korea and the UAE, are making significant strides in pushing blockchain forward. We have a real chance to be at the center of this revolution and play a crucial role in the efforts to bring blockchain to the masses.

Christos Mastoras
Christos Mastoras
Managing Partner @ Iliad Partners
 
The expanding range of success stories and exits is expected to attract more capital allocation to the VC asset class, and we’ll likely see more funds and larger funds emerge to complement existing players. Within this context, in the future, we expect to see more innovation emerge from the region and MENA startups that can scale and compete beyond MENA in global markets. This will be facilitated by increasing technical talent, governments such as Dubai making innovation a priority, and corporates seeking to access innovation among other things. We are already seeing initial evidence of this, and we hope to see more home-grown innovation in the future.



 

 

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